Quantum Energy (QTM)

Solar water heating and medical products distributor
Quantum Energy
has nose-dived by around 60 per cent after hitting a near six-year high of 41¢ in early August.

The stock slid on fears of adverse changes to the government’s cash incentives to renewable technologies and the issuing and sale of renewable certificates that energy retailers are required to buy to meet renewable energy targets.

This is expected to affect Quantum’s sales following its stellar 2008-09 result where the company swung to a net profit of $30.3 million from a loss of $7.7 million the year before as revenue surged 273 per cent to $106.1 million.

The stock will likely remain volatile as Quantum and other renewable energy companies lobby the government to correct the supply-demand imbalances for the certificates.

Until there is greater certainty on this front, the market is unlikely to re-rate the stock despite the fact it is trading on a seemingly attractive price-earnings multiple of a little over five times - around half that of other household durable goods companies.